The report says the results of monitoring showed high levels of faecal pollution in the lagoon and foreshore and notes the general poor water quality in the inner Manukau Harbour.
Council water quality specialist Sharon Tang said the poor water quality was a serious public health concern, and the newly-created beaches were likely to need "no swimming" signs unless the pollution was stopped.
Watercare Services operations manager Mark Bourne said: "It is not prudent to locate a beach and contact recreation area next to an overflow discharge structure."
At present, the pipe posed minimal or no public health risk because of its isolated location. But putting a beach there would increase the public health risk.
He said Watercare had no plans to upgrade either the sewer trunk main or the local reticulation network because the area was low priority.
A cultural impact assessment from Ngati Te Ata, Te Akitai and Ngati Tamaoho said: "It is totally unacceptable to iwi that Auckland Council is prepared to spend $28 million to reclaim 6.8ha of the Onehunga foreshore as a legacy and beautification project promised to residents 30 years ago, while the existing Onehunga Lagoon and foreshore water quality fails all guideline tests for human health, is polluted with faecal matter and stormwater pollutants."
The independent commissioners, Leigh McGregor, Byrdie Ayres, Max Dunn and Mark Farnsworth, said the answer to the quality of water was not a matter to be addressed in the parks, sport and recreation department's application and should go to another forum.
Without any firm intent to address water quality issues, the commissioners agreed, the project could be reduced to beautification and mainly land-based recreation.
The council should monitor water and put up warning signs if the quality did not meet "SafeSwim" standards.
Commissioners noted that during the lunch break the council changed the beach design to take coarse gravel/shell to make it hard to walk on and keep people from the pipe.
The panel said the project would realise the wishes of the Onehunga community for some measures to make up for the effects of building SH20, now the city's Southwestern Motorway and its main route to Auckland International Airport.
Onehunga Enhancement Society chairman Jim Jackson said he was confident water quality issues would be addressed, if not as part of the project, then by the time the project was completed in about two years.
RECREATION SEASIDE PARK
* $28 million project.
* $18 million from NZ Transport Agency.
* 6.8ha park to be reclaimed.
* 1km coastline created.
* 290,000 tonnes of earth fill.
* SH20 cycle/walk bridge.
* 40m boat ramp.
* 9 sandy/gravel beaches.
* 1.7km cycle path.